At the end of 2015,Durango Company recorded an adjusting entry for its obligation under product warranties.During 2016,it replaced products to its customers under the terms of the warranties.The 2016 warranty settlements should be recorded as asset use transactions.

Question

Quizplus · Accepted Answer

Warranty settlements involve using company resources (assets) to fulfill obligations, thus they are recorded as asset use transactions.

At the End of 2015,Durango Company Recorded an Adjusting Entry